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TMI Blog2003 (10) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. They submitted the replies, which were considered and the matter was referred to the Disciplinary Committee of the Association, respondent no. 2. Petitioners were heard in person. Respondent No. 2 passed order dated 8-10-2003 imposing the penalty of Rs. 1 lakh on each petitioner and directed them to deposit the same by 15-10-2003. Being aggrieved, petitioners preferred appeals before the appellate forum. The same are pending but their stay applications have been rejected vide order dated 15-10-2003 with a remark that appeals shall be entertained only if petitioners deposit the penalty imposed. 3. Preliminary objection has been raised by Shri Manish Goyal and Sanjai Goswami, learned counsel for the respondents, regarding maintainability of the writ petition, contending that respondent no.1 is merely an Association. It does not perform any public function/duty nor the State has any pervasive control nor it is given financial assistance, fully or partly. It is an association of private businessman and even if the Board superseded by the SEBI appointing Administrator, i.e., it is only a regulatory measure and not a control to the extent that it becomes State or other aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -operative society. 9. Similar view has been taken by the Karnataka High Court in Workmen Kampli Co-operative Sugar Factory Ltd. v. Management of Kampli Sugar Factory Ltd. 1994 Lab IC 2074, and it has been held that such rights are purely of a private nature and the same cannot be challenged in writ jurisdiction and in spite of the fact that the expression "Government function may suffer from vagueness and indefiniteness, the activity of manufacturing sugar cannot fall within the ambit of public duty or Governmental function as the production of sugar is being done only with the view to earn profit for the members of the society. 10. In Co-operative Central Bank Ltd. v. Additional Industrial Tribunal, AIR 1970 SC 245, the Supreme Court observed that the bye-laws of a co-operative society framed under the provisions of the Act do not have any force of law as the bye-laws contemplated by the Act govern the internal management, business or administration of a society and they may be binding upon the persons affected by them. The bye-laws providing for the service conditions of the employees of the society may be binding between the society and its employees in the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Ajay Hasia v. Khalid Mujib Sehravardi , AIR 1981 SC 487; and Ramana Dayaram Shetty, v. International Airport Authority , AIR 1979 SC 1628 and came to conclusion that as the society was not doing Governmental function or had been of any pervasive State control was not there, the society could not be found to be State within the meaning of Article 12 of the Constitution of India. The public authority must be a body, which has legal authority to determine the question affecting the statutory rights or obligations of other persons as individual. Such body must be the creation of the statute and its powers and duties are defined by the statute, e.g., legal authorities, statutory undertakings and corporations. When an authority protects only the private rights of its individual member, it can not be said to be performing the public duty. However, the Court held that if the duty imposed on body, whether expressly or by implication was a public duty and the body was exercising public law function, the decision of that body would be amenable to judicial review. Applying all those tests, the Court examined the nature of the co-operative society involved in that case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to his office and is in the nature of his public duty and came to the conclusion that unless there is legal obligation or a duty imposed by a statute, the violation of the same shall not render the person amenable to writ jurisdiction. 15. In Chakradhar Patel v. Samasingha Service Co-operative Society Ltd. AIR 1982 Ori. 38, the Orissa High Court held that the termination of the services of an employee of a society cannot be challenged in writ jurisdiction. While deciding that case, reliance had been placed on the judgment of the Supreme Court in Executive Committee of Vaish Degree College v. Lakshmi Narain, AIR 1976 SC 888. Similarly, a Full Bench of Kerala High Court in P. Bhaskaran v. Additional Secretary, Agricultural (Co-operation) Department , AIR 1988 Ker. 75, held that the co-operative societies are not the creation of the Co-operative Societies Act and they are not statutory bodies. They are merely functioning in accordance with the provisions of the Act as the institutions would have legal existence, even if the Co-operative Societies Act was not in force. There is no deep and pervasive State control, the management is under the effective control of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory Corporations, like ONGS, LIC and IFFCO under different statutes, are the other authorities within the meaning of Article 12 of the Constitution and in case a corporation is owned, managed and could be dissolved by the Government; were under complete control of the Government and preforming public or statutory duties for the benefit of the public and not private profit, it would amount to acting as the agency of the Government. 21. In Steel Authority of India Ltd. v. Shri Ambika Mills Ltd. [1998] 1 SCC 465, the Court held that SAIL was a department or agency of Union of India for the reason that the Government of India owned only some of the share capital. 22. In Biman Krishna Bose v. United India Insurance Co. Ltd. [2001] 6 SCC 477, the Apex Court held that in order to maintain a writ petition against a Company/Association/Society, it is necessary to determine as to whether it falls within the ambit of State authorities and for that purpose, the test is whether it has a trappings of the State and in a case where a Government company had been conferred the right and privilege to carry on business activities to the complete exclusion of others, the Court held the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant case requires to be examined in the light of the aforesaid settled legal propositions. The Memorandum of Articles of Association of the respondent No.1 read that on 8th October, 1979, seven persons named therein, formed a company and agreed to take a number of share in the capital of the company, shown opposite to their respective names. The main object of the Association-respondent No.1 has been as under : ( i )To organize and carry on the Stock Exchange and regulate that business of exchange of stocks and shares, debentures and debenture stocks, Government securities bonds and equities of any description and with a view thereto, to establish and conduct Stock Exchange in Kanpur and/or elsewhere; and ( ii )To acquire the membership of any other recognized Stock Exchange in India or abroad including membership of OTC Exchange of India to broad base the operations of the Stock Exchange for the benefit of the general public and investors at large through its member brokers provided no trading will be made by the Exchange on its own behalf." It further provides for the incidental or ancillary object to be attained by it and it includes to facilitate the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of the powers under the provisions of the Securities Contract (Regulation) Act, 1956, hereinafter called the Act 1956 , the respondent No. 3-SEBI has superseded the Board and appointed the Administrator, as it is merely a matter of regulating the activities of the Board which may be taken under the compelling circumstances to protect the innocent depositors or shareholders from fraud etc. by the members of the Association. If the society registered under the Cooperative Societies Act, 1965 is superseded by the Registrar of the Societies, and the Administrator is appointed, that itself would not make the society amenable to the writ jurisdiction. The effect will be that the order passed by the Registrar superseding the administration of the Society or appointing the Administrator may be challenged in writ jurisdiction, being passed by an statutory authority, therefore, there can be no difficulty in holding that the order passed by respondent No. 3-SEBI superseding the Board and appointing the Administrator itself alone can be challenged in writ jurisdiction but once the Administrator is appointed, he substitutes the Board and nothing beyond it. Any order passed by it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change and its nature/status, the Court observed as under : "Under the Act, Stock Exchange means any body of individuals, whether incorporated or not, constituted for the purpose of assisting or controlling the business of buying, selling or dealing in securities. A Stock Exchange provides facilities to liquefy capital by enabling a person who has invested money in any company by way of shares which is converted into cash by disposing of his share in the enterprise to someone else. A Stock Exchange gives mobility to the capital in the absence of which the capital invested in the form of shares in any enterprise would become locked up. The proper working of a Stock Exchange essentially depends not only on the caliber of the members constituting it, but also perhaps more importantly on their moral stature. In carrying out the activities in a stock exchange the members thereof should be men of valour, prudence, level-headed and act with wisdom even in the most adverse circumstances. They must also be men of good financial stability, considerable experience, capable of assessing the market psychology etc. The stocks and shares are dealt with in three manners-( i ) Spot delivery contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution of India cannot be invoked". We see no cogent ground to take a view different from the judgment of the Division Bench of this court in Smt. Veena Ojha s case ( supra ). 32. The Association had been formed by the private individuals for carrying on the business of dealing in shares, debentures and government securities. It does not perform any governmental function/public or statutory duty. Existence of the Association is independent of any statutory provision. State does not have pervasive and deep control over its day-to-day administration. Power of nominating some of its members or enabling provisions for the SEBI to supersede the Board and appoint Administrator in a particular eventuality, would not make the Association as other authorities or instrumentality or agency of the State. State does not contribute any funds to it at all. The functions of the Association are not at all of a public importance. It is merely a company registered under the Act 1956 and not a governmental company. By no stretch of imagina- tion, it can be held that it has the trappings of the State. The judgment of the Bombay High Curt, referred to above, in this regard does not lay dow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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